OREANDA-NEWS. Fitch Ratings Indonesia has assigned ratings to PT Federal International Finance's (FIF; AAA(idn)/Stable) proposed senior unsecured bonds, as follows:

- bonds with a maturity of 36 months assigned a National Long-Term Rating of 'AAA(idn)'

- bonds with a maturity of 370 days assigned a National Short-Term Rating of 'F1+(idn)'.

FIF's proposed bond issuance, the fourth tranche under the bond programme, will be up to IDR2.125trn in size with a maturity of up to three years. The proceeds from the bond programme will be used mainly to support the company's growth.

'AAA' National Long-Term Ratings denote the highest rating assigned by Fitch on its national rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country.

'F1' National Short-Term Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. On Fitch's National Rating scale, this rating is assigned the lowest default risk relative to others in the same country. Where the liquidity profile is particularly strong, a "+" is added to the assigned rating.

KEY RATING DRIVERS

The bonds are rated at the same level as FIF's National Long-Term and Short-Term Ratings, in accordance with Fitch's criteria.

The ratings reflect Fitch's expectation that FIF will receive support from parent, PT Astra International Tbk (AI), in time of need. This is based on FIF's significant contribution to AI's core motorcycle business and the parent's almost 100% ownership of FIF. FIF plays an important role, as an integral part of AI's motorcycle business chain, in providing direct financing services for the purchase of Honda motorcycles produced by Astra Honda Motor, a 50:50 joint venture between AI and Honda Motor Co., Ltd (A/Stable).

RATING SENSITIVITIES

Any changes in FIF's National Ratings would affect the issue ratings.

There is no rating upside for FIF's National Rating, as it is already at the top of the scale.

A large drop in FIF's contribution to AI would result in negative rating action. A significant decline in AI's ownership and deterioration in its performance or support would also threaten FIF's ratings, although Fitch does not believe this is probable due to FIF's importance to AI's and Astra Honda Motor's core motorcycle business.